Eliminate Risk of Failure with IMANET CMA Exam Dumps
Schedule your time wisely to provide yourself sufficient time each day to prepare for the IMANET CMA exam. Make time each day to study in a quiet place, as you'll need to thoroughly cover the material for the Certified Management Accountant exam. Our actual Certified Management Accountant exam dumps help you in your preparation. Prepare for the IMANET CMA exam with our CMA dumps every day if you want to succeed on your first try.
All Study Materials
Instant Downloads
24/7 costomer support
Satisfaction Guaranteed
A company is considering the purchase of a new machine to replace a five-year old machine and has gathered the following information: Purchase price of new machine $50,000 Installation cost of new machine 4,000 Market value (selling price) of the old machine 5,000 Book value of the old machine 2,000 Increase in net working capital if new machine is installed 1,000 Effective income tax rate 40% It the company replaces the old machine with the new machine, what is the cash flow in period 0?
See the explanation below.
The net initial investment for a capital project consists of three components: the purchase of new equipment, the increase in working capital, and the after-tax proceeds from the disposal of old equipment For this company, the first of these is $54,000 ($50,000 + $4,000), and the second is $1,000. The calculation of the after-tax proceeds from the disposal of the old equipment is as follows:
Mobile Home Manufacturing, Inc. is evaluating a proposed acquisition of a new machine at a purchase price of $380,000 and installation charges that will amount to $20,000. A $15,000 increase in working capital will be required The machine will hate a useful life of four years, after which it can be sold for $50,000. The estimated annual incremental operating revenues and cash operating expenses are $750,000 and $500,000. respective, for each of the four years. Mobile Home's tax rate is 40%, and the cost of capital is 12%. Mobile Home uses straight-line depreciation for both financial reporting and income tax purposes. If Mobile Home accepts the project, the initial investment will be
See the explanation below.
The net initial investment for a capital project consists of three components: the purchase of new equipment, the increase in working capital, and the salvage value of old equipment Mobile Home Manufacturing's calculation is thus as follows:
The management of Pelican, Inc. is evaluating a proposed acquisition of a new machine at a purchase price of $180,000 and with installation costs of $10,000. A $9,000 increase in working capital will be required. The machine Will have a useful life of four years, after which it can be sold for $30,000. The estimated annual incremental operating revenues and cash operating expenses are $450,000 and $300.000, respectively, for each of the four years. Pelican's effective income tax rate is 40%. and the cost of capital is 12%. Pelican uses straight-line depreciation for both financial reporting and income tax purposes. If the project is accepted, the estimated incremental after-tax operating cash flows at the end of the first year wilt be?
See the explanation below.
The estimated incremental after-tax operating cash flows for each year of a capital project consist of two components: the after-tax cash inflows from operations and the depreciation tax shield arising from me purchase of new equipment. The first of these for Pelican can be calculated as follows:
Pelican's total incremental after-tax operating cash flows for each year of the project's
life is thus $106,000 ($90,000 + $16,000).
The chief financial officer of Pauley, Inc has requested an evaluation of a proposed acquisition of a new machine at a purchase price of $60.000 and with installation costs of $10,000. A $3,000 increase in working capital will be required. The machine will have a useful life of four years. after which it can be sold for $10,000. The estimated annual incremental operating revenues and cash operating expenses are $150,000 and $100,000, respectively, for each of the four years. Pauley's effective income tax rate is 40%, and the cost of capital is 12%. Pauley uses straight-line depreciation for both financial reporting and income tax purposes. Pauley's estimated after-tax cash flow in the fourth year, at which time the equipment will be sold, will be?
See the explanation below.
The estimated incremental after-tax operating cash flows for each year of a capital project consist of two components: the after-tax cash inflows from operations and the depreciation tax shield arising from the purchase of new equipment. The first of these for Pauley can be calculated as follows:
Pauley's total after-tax operating cash inflow for each year of the project's life is thus $36,000 ($30,000 + $6,000). Ii the final year of the project, two additional cash flows must be taken into account, the after-tax proceeds from the disposal of the equipment purchased for the project, and the recovery of working capital devoted to the project. These two additional cash flows can be calculated as follows:
Pauley's total after-tax cash inflow for the final year of the project's life is thus $49,000
($36,000 + $13,000).
The Hopkins Company has estimated that a proposed project's 10-year annual net cash benefit, received each year end. will be $2,500 with an additional terminal benefit of $5,000 at the end of the 10th year. Assuming that these cash inflows satisfy exactly Hopkins' required rate of return of 8%, calculate the initial cash outlay
See the explanation below.
If the 8% return exactly equals the present value of the future flows ., NPV is zero), then simply determine the present value of the future inflows. Thus, Hopkins Company's initial cash outlay is $19,090 [($2,500)(PVIFA at 8% for 10 periods) + ($5J00)(PVlF at 8% for 10 periods ($2,500)(6.710) + ($5,000)(.463)].
Are You Looking for More Updated and Actual IMANET CMA Exam Questions?
If you want a more premium set of actual IMANET CMA Exam Questions then you can get them at the most affordable price. Premium Certified Management Accountant exam questions are based on the official syllabus of the IMANET CMA exam. They also have a high probability of coming up in the actual Certified Management Accountant exam.
You will also get free updates for 90 days with our premium IMANET CMA exam. If there is a change in the syllabus of IMANET CMA exam our subject matter experts always update it accordingly.